4 Ideas Investors Should Accept Before Buying ViaSat Shares

ViaSat, Inc. (NASDAQ: VSAT) is poised for solid medium- and long-term growth from the launches of Viasat-2 and Viasat-3, Wells Fargo’s Andrew Spinola said in a report. He upgraded the rating on the company to Outperform, while raising the valuation range to $94-$98.

4 Ideas To Consider

Spinola believes investors should consider the following before making an investment in Viasat:

1. Past and ongoing investments could result in substantial medium-term and long-term growth in EBITDA, and eventually in Free Cash Flows
2. The IRR [internal rate of return] on V-2 and V-3 investments could prove to be significant higher than the cost of capital
3. There could be substantial demand globally for consumer satellite broadband
4. Viasat has a technological advantage in High-Throughput Satellite [HTS] networks, which could enable the company to gain share in data and mobility markets to fill all three V-3 satellites

“[W]hile we in no way believe all of these statements are definitively true, we believe the risk/reward across the question set is strongly in our favor,” Spinola commented. He added that first Echostar Corporation (NASDAQ: SATS) and then Viasat would “reignite strong growth in consumer broadband subscribers in 2017.”

The analyst expressed concern regarding the scale of the second and third Viasat-3s and the demand/execution risk in filling those satellites in the EMEA/APAC (Europe, the Middle East and Africa/Asia-Pacific) regions. The EPS estimates for F2017 and F2018 have been reduced from $1.05 to $1.02 and from $0.54 to $0.46, respectively.